According to a flash estimate by the Central Statistical Office (GUS), consumer goods and services prices in June this year increased by 2.6% compared to the same month in 2023 and were 0.1% higher than in the previous month.
Everyone was wrong. This is how we can summarize today’s flash estimate of inflation in June at 2.6%. Just a month ago, we wrote that if inflation this month does not exceed the target of the National Bank of Poland (NBP), we might witness at least a change in the narrative of the Monetary Policy Council members regarding the level of interest rates this year.
However, next month seems more critical in this regard, as it will already include the increase in energy and gas prices. These two elements weigh quite heavily in the inflation basket.
At the moment, detailed data from GUS indicate that food prices have risen by 2.5% compared to the previous year. Here, the effect of the return of the VAT rate on food is becoming visible. Perhaps companies have decided that they cannot fully absorb the price increases and have spread them over time to be less burdensome for citizens.
Everything indicates that inflation is still driven by service prices rather than product prices, and this is likely to remain so given the rising labor costs.
Relatively low inflation may indicate another aspect. We prefer to save rather than consume, which could impact GDP growth. Let me remind you that everyone unanimously counts on consumption to drive economic growth this year.
Commentary by Mariusz Zielonka, economic expert at Lewiatan.
